Correlation Between Tidal Trust and Nuveen NASDAQ

Can any of the company-specific risk be diversified away by investing in both Tidal Trust and Nuveen NASDAQ at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tidal Trust and Nuveen NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tidal Trust II and Nuveen NASDAQ 100, you can compare the effects of market volatilities on Tidal Trust and Nuveen NASDAQ and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tidal Trust with a short position of Nuveen NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidal Trust and Nuveen NASDAQ.

Diversification Opportunities for Tidal Trust and Nuveen NASDAQ

0.91

Correlation Coefficient

Tidal Trust  Nuveen NASDAQ

Almost no diversification

The 3 months correlation between Tidal and Nuveen is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Tidal Trust II and Nuveen NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen NASDAQ 100 and Tidal Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tidal Trust II are associated (or correlated) with Nuveen NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen NASDAQ 100 has no effect on the direction of Tidal Trust i.e., Tidal Trust and Nuveen NASDAQ go up and down completely randomly.

Pair Corralation between Tidal Trust and Nuveen NASDAQ

Considering the 90-day investment horizon Tidal Trust II is expected to under-perform the Nuveen NASDAQ. In addition to that, Tidal Trust is 3.29 times more volatile than Nuveen NASDAQ 100. It trades about -0.06 of its total potential returns per unit of risk. Nuveen NASDAQ 100 is currently generating about 0.25 per unit of volatility. If you would invest  2,535  in Nuveen NASDAQ 100 on September 23, 2024 and sell it today you would earn a total of  106.00  from holding Nuveen NASDAQ 100 or generate 4.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Tidal Trust II  vs.  Nuveen NASDAQ 100

Tidal Trust II

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Tidal Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Nuveen NASDAQ 100

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen NASDAQ 100 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Nuveen NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tidal Trust and Nuveen NASDAQ

The main advantage of trading using opposite Tidal Trust and Nuveen NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidal Trust position performs unexpectedly, Nuveen NASDAQ can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nuveen NASDAQ will offset losses from the drop in Nuveen NASDAQ's long position.

The idea behind Tidal Trust II and Nuveen NASDAQ 100 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.